China's Overseas Investments in the Wind and Solar Industries

Trends and Drivers

Shifting to a low-carbon economy will require current emitting countries and projected future emitters to rapidly scale up their investments in renewable energy. By some estimates, China is already the leading global investor in renewable energy infrastructure, and is increasing its overseas investments in renewable energy, particularly solar and wind. This working paper aims to help policymakers, investors, and researchers better understand the trends in China’s overseas investments in the wind and solar industries, as well as the factors behind those trends.

Key Findings

The majority of investments were in electricity generation.
Twenty-seven of the wind investments were in wind farms
predominantly carried out through joint ventures, as were
most of the 41 solar investments. Several investments
were made in manufacturing facilities and to establish
sales and marketing offices. Most of the investments were
concentrated in a few developed countries: the United
States, Germany, Italy, and Australia. A handful of developing
countries, including South Africa, Pakistan, and
Ethiopia, also attracted investments.

China’s investments in the wind and solar industries are
driven by a multitude of factors including macroeconomic
conditions; industry conditions; policies (both general and
specific to the wind and solar industries) that “push” Chinese
companies to invest overseas; policy incentives in host
countries that “pull” Chinese investors; and financial support
from Chinese banks that “enables” these investments.

China is driven to seek solar and wind markets overseas
largely because its manufacturing capacity exceeds domestic
demand. The Chinese government’s policy support
and financial support—mainly from state-owned banks
that respond to government policy—encourage this overseas
investment trend. Host countries’ policies have also
attracted investments from China’s solar and wind industries,
either advertently through tax breaks, feed-in tariffs,
or bilateral cooperation agreements, or inadvertently as a
“side-effect” of policies discouraging imports.

Although the analysis in this working paper points to
interesting trends and provides useful insights that
enhance our understanding of China’s role as an overseas
investor in the wind and solar industries, it is limited by
a paucity of information. Beyond the data collected for
the 124 investments, the authors also reviewed literature
and carried out interviews to deepen the analysis. The
analysis is confined to a subset of the renewable energy
sector rather than the full range of possible low-carbon
investments. The inadequacy of the data does not allow
an analysis of the emissions impact of these investments.
These limitations suggest areas for further research that
could help improve an understanding of China’s potential
to reduce emissions beyond its borders, and would allow
policy analysis on how China could increase this positive
impact, particularly in developing countries.

Executive Summary

Shifting to a low-carbon economy will require current
emitting countries and projected future emitters to rapidly
scale up their investments in renewable energy. In recent
years, major emerging economies like China, India, and
Brazil have been catching up with leading developed
country investors in Europe and the United States. By
some estimates, China is already the leading global investor
in renewable energy infrastructure, and is increasing
its overseas investments in renewable energy, particularly
solar and wind. If China achieves its goal of sourcing 15
percent of its energy mix from renewables by 2020 and
30–45 percent by 2050, renewable energy will become
closer to a mainstream energy resource within the country.
Cost reduction incurred in this process would benefit
not only China, but also the rest of the world.

This working paper aims to help policymakers, investors,
and researchers better understand the trends in China’s
overseas investments in the wind and solar industries,
and the factors behind those trends. It examines the scale,
nature, and types of China’s overseas investments in the
wind and solar industries, and identifies the policy and
market factors that drive these investments.
China has made at least 124 investments in solar and wind
industries in 33 countries over the past decade. Of the
investments for which data were available, the cumulative
value amounted to nearly US$40 billion in 54 investments,
and the cumulative installed capacity added was
nearly 6,000 MW in 53 investments. Of the 124 investments,
41 were in the wind industry, 81 in the solar industry,
and 2 in both the wind and solar industries.

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